<![CDATA[Background: Low-cost food and beverage franchises often operate under spatial and operational constraints, yet some brands continue to maintain strong customer loyalty. Mixue's compact outlets, high customer density, and standardized franchise format do not appear to prevent repeat patronage. Objective: This study examines the impact of Service Quality and Product Innovation on Customer Loyalty, as mediated by Customer Satisfaction, within the low-cost franchise sector. It focuses on Mixue outlets in Malang to analyze these relationships under conditions of operational crowding. Method: This study utilized a quantitative explanatory research study design. Primary data were collected from 230 respondents who were purposively selected and had recently dined at a Mixue outlet in Malang. Analysis of the data was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). Results: Although both Service Quality and Product Innovation positively influence Customer Loyalty, Service Quality exerts a significantly stronger impact. Product Innovation, though significant, shows a weak direct effect. Crucially, Customer Satisfaction functions as a complementary mediator where product novelty translates into sustained Customer Loyalty only when it first generates satisfaction through a low-friction service environment. Conclusion: Customer loyalty in low-cost, high-traffic dessert franchises is driven more by consistent, clean, comfortable, and low-friction service than by product innovation alone. Product innovation supports loyalty mainly when it enhances customer satisfaction, confirming the central role of service quality and satisfaction in sustaining repeat patronage. Keywords: Customer Loyalty; Customer Satisfaction; Product Innovation; Service Quality]]>
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